The Demand for New Halls and Warehouses Will Grow Even in 2017

Interest in industrial real estate such as warehouses, distribution centres, industrial halls and plants in the Czech Republic has been steadily increasing since 2011 and can be expected to be successful this year with the excellent results of previous years. The main indicator of market growth is the growth in demand for industrial property, which should exceed the year-on-year record. A higher demand is expected again in the total volume of about 950 thousand m2 in 2017.

The demand for the industrial and logistics market will continue to be logistics, e-commerce and the automotive industry. In addition to the new XXL stores, there will be interest once again in much smaller warehouses near the city centre or “last mile delivery facilities”. Because of the limited availability of suitable plots of land in suburban locations, there may be a greater interest in Class B warehouses.

Customers have changed their requirements, with new types of halls and warehouses are being created

Changing consumer demands and behaviours and changes in consumer habits, produce, store or distribute goods, are driving the need for new production halls and warehouses of different types and sizes. The emphasis will be on consolidating more customers under one roof, especially for logistics companies. Given the accelerating pace of the whole industry, the focus is also on the rapid construction of new halls bringing advantage to the developers who own the land including all the necessary building permits. In 2017, the construction of Class A industrial buildings will be completed with an estimated total area of 660 thousand m2.

The number of development projects which have been implemented has been increasing steadily since 2012. Still, developers do not have to worry that their spaces will be unoccupied. The vacancy rate of the existing premises has been around 5% over the long term. Even further reductions in unoccupied industrial space are expected to be around 4.3% in 2017. In some regions, a larger share of speculative construction can be expected. At the same time, German e-shops in particular are likely to continue to be interested in distribution centres in the Czech Republic.

Another factor influencing the technical solutions in halls is the introduction of automation. In the long run, it will alleviate the pressure on the availability of labour in a given location. Increased interest in Czech halls could also come from British companies in connection to Brexit, as some of them are currently looking for a new location from where they can manage their operations instead of the UK.